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Development of the Trend Indicator of Output

The former Monthly Indicator of Total Output has been revised and is published under the new name of Trend Indicator of Output. The development work was done during 2008 alongside the calculation of the indicator without breaks in publications. The development project has now ended but some changes can still be expected in 2009. So far the calculation of the indicator has been harmonised with the calculation methods of the quarterly accounts output. The calculation of industry-specific data is now primarily based on value data deflated with previous year's average prices. This produces volume figures at previous year's prices, in which the previous year is always the base year. Volume changes at previous year's prices are used to chain a continuous volume series at reference year 2000 prices with the so-called annual overlap method. This series is published as the Trend Indicator of Output. This method corresponds to the deflation and chaining method applied to quarterly accounts output.

The source data used in the calculation of the Trend Indicator of Output cover most of the data used in quarterly national accounts. The calculation is performed at the 2-digit level of the classification of economic activities but not by a breakdown by sector as in quarterly national accounts. Intermediate consumption is not estimated separately either. The publication level is primary production, secondary production and services. For manufacturing and private services the primary sources of value data are preliminary data from turnover indices and for public services preliminary data from wage and salary indices, while producer price indices and indices of wage and salary earnings are used as sources for price data. The source data for primary production derive from information on volumes of milk received by dairies, slaughterhouse statistics, crop production statistics, data on market fellings, and unit price data corresponding with these unit volume data.

One of the central questions the development work endeavoured to answer is whether the Trend Indicator of Output should predict the output or the value added of the national economy. The development project strengthened the view that the main aim of the Trend Indicator of Output should be prediction of value added but no final answer to the question was found. As the Indicator is based on output indicators and the estimation of intermediate consumption cannot, under the present publication schedule, be regarded reliable enough to be incorporated into the calculation, the Indicator should for the moment be seen as predictor of output for the latest months. Estimation of intermediate consumption will be studied further during 2009.

The historical time series is benchmarked against published quarterly accounts. This methodological measure aimed at improving the quality of the statistics is justified by the fact that quarterly and annual accounts are based on more comprehensive sources than the Trend Indicator of Output, and in order to produce a coherent history of the economy, the exploitation of the information contained in quarterly and annual accounts through benchmarking methods has generally been seen as worthwhile. The historical time series of the Trend Indicator of Output is benchmarked against the value added series of quarterly accounts. Thus the historic time series of the Trend Indicator of Output follows the development of quarterly and annual accounts. In spite of the benchmarking, the Trend Indicator of Output cannot be regarded as a genuine predictor of value added. Estimation of intermediation consumption is not done like in quarterly accounts, and the benchmarking is not done for the latest months of a quarter that are not yet published in quarterly accounts but their values are incorporated into the time series in accordance with changes in output indicators.

Inquiries: Mr Samu Hakala +358 9 1734 3756, Mr Veli-Pekka Karvinen +358 9 1734 2667 kansantalous.suhdanteet@stat.fi

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Last updated 9.2.2009